The Impact of ESG Performance on Financial Profitability: Evidence from Tunisia (2021-2025)

Domaine:

socioeconomic

Type de record:

paper

Créateur:

Moh

Éditeur:

Hôte:

This study examines the relationship between Environmental, Social, and Governance (ESG) performance and financial profitability among Tunisian firms listed on the Bourse des Valeurs Mobilières de Tunis (BVMT) over the period 2021-2025. Using a panel dataset comprising 100 firm-year observations across 20 leading companies spanning Banking, Agribusiness, Insurance, Industry, and Retail sectors, we employ pooled ordinary least squares (OLS) regression to evaluate whether superior ESG practices translate into enhanced accounting profitability.

Our composite ESG score, constructed from nine sub-criteria weighted 40% Environmental, 30% Social, and 30% Governance, reveals a statistically significant positive association between ESG performance and both Return on Assets (ROA) and Return on Equity (ROE). Specifically, a one-point improvement in the ESG score is associated with a 1.50 percentage point increase in ROA and a 1.64 percentage point increase in ROE.

When controlling firm size and financial leverage, the ESG coefficient remains positive and significant for ROA, while the effect on ROE becomes marginally significant. These findings provide robust empirical support for the stakeholder theory proposition that sustainable business practices constitute a value-creating strategic lever rather than a mere regulatory cost, even within the institutional context of an emerging North African frontier market.

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